Former Secretary Of Puerto Rico Department Of Education And Former Executive Director Of Puerto Rico Health Insurance Administration Indicted With Four Others For Conspiracy, Wire Fraud, Theft Of Government Funds, And Money Laundering
SAN JUAN, Puerto Rico– Julia Beatrice Keleher, former Secretary of the Puerto Rico Department of Education (“PR DOE”), Ángela Ávila-Marrero, former Executive Director of the Puerto Rico Health Insurance Administration (“ASES”), Alberto Velázquez-Piñol, Fernando Scherrer-Caillet, Glenda Ponce-Mendoza, and Mayra Ponce-Mendoza have been indicted and arrested for their participation in a conspiracy to steal and convert federal funds involving fraudulently obtained contracts from the PR DOE and ASES, announced U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico. The Federal Bureau of Investigation is handling the investigation with the United States Department of Education, Office of Inspector General, and the United States Department of Health and Human Services, Office of Inspector General.
The indictment returned yesterday, July 9, 2019, by a federal grand jury in the District of Puerto Rico, includes 32 counts against the following individuals:
- Julia Beatrice Keleher (“Keleher”), the Secretary of the Puerto Rico Department of Education (PR DOE) from January 2017 until April 2019;
- Ángela Ávila-Marrero (“Ávila-Marrero”), the Executive Director of the Puerto Rico Health Insurance Administration, from February 2017 until June 25, 2019;
- Alberto Velázquez-Piñol (“Velázquez-Piñol”), President of Azur, L.L.C. (“Azur”);
- Fernando Scherrer-Caillet (“Scherrer-Caillet”), managing partner of BDO, Puerto Rico, P.S.C.;
- Glenda E. Ponce-Mendoza, Special Assistant to PR DOE Secretary Keleher;
- Mayra Ponce-Mendoza, owner of Colón & Ponce, Inc., and sister of defendant Glenda E. Ponce-Mendoza.
The indictment alleges that the defendants used Keleher’s and Ávila-Marrero’s positions as Secretary of PR DOE and Executive Director of ASES, respectively, to benefit and enrich themselves and defraud the United States as follows:
- Count 1 of the Indictment charges a wire fraud conspiracy. The purpose of the conspiracy was to steer contracts between the PR DOE and Colón & Ponce, a company owned by Mayra Ponce Mendoza. This was accomplished through a corrupted bidding process pursuant to a Request for Proposal (“RFP”), wherein Colón & Ponce was provided with a competitive advantage over other bidders based in part, on the close relationship between Keleher, Glenda Ponce-Mendoza, and her sister Mayra Ponce-Mendoza. Despite being unqualified under the terms of the RFP, Colón & Ponce was awarded a $43,500 contract, which was later increased to $95,000. The increased amount was used to pay in part the salary of one of Keleher’s special assistants. Keleher pressured a PR DOE official identified as Individual B in the indictment to execute the Colón & Ponce contract on behalf of PR DOE. Counts 2 through 11 list the wire communications transmitted by Keleher and the Ponce-Mendoza sisters in order to perpetrate the scheme set forth in Count 1.
- Count 12 of the Indictment charges Keleher, Velázquez-Piñol, and Scherrer-Caillet with conspiring to violate 18 U.S.C. § 641 (theft and conversion of government money and property in excess of $1,000). The conspiracy and scheme to defraud involved federal funds paid by PR DOE to BDO for several contracts totaling over $13 million from January 2017 until April 2019. Despite express prohibitions in said contracts, BDO subcontracted other companies to perform the services, and paid Velázquez-Piñol, through his company Azur, a 10% commission for the contracts awarded through Velázquez-Piñol’s influence with government officials. By paying unauthorized commissions, the cost of government contracts was unnecessarily inflated and increased. Velázquez-Piñol, through Azur, received approximately $219,059 in commissions from BDO for the PR DOE contracts it was awarded. Counts 13 through 18 list the wire communications transmitted and caused to be transmitted in interstate commerce, all in furtherance of the conspiracy, scheme to defraud, and the theft of federal funds.
- Count 19 charges Ávila-Marrero, Velázquez-Piñol, and Scherrer-Caillet with conspiring to violate 18 U.S.C. § 641 (theft and conversion of government money and property in excess of $1,000). The conspiracy and scheme to defraud involved federal funds paid by ASES to BDO for several contracts totaling $2.5 million during the period between January 2017 and June 2019. Ávila-Marrero provided internal ASES information on several contracts to Velázquez-Piñol. BDO and other companies used this internal information, provided by Velázquez-Piñol, to submit proposals to ASES, and replace the existing contracts. During ASES board meetings, Ávila-Marrero recommended the cancellation of the contracts and the award of replacement contracts to BDO and another company represented by Velázquez-Piñol. Despite express prohibitions in said contracts, BDO subcontracted other companies to provide the services, and paid Velázquez-Piñol, through his company Azur, a 10% commission for the contracts awarded through Velázquez-Piñol’s influence with government officials. By paying unauthorized commissions, the cost of government contracts was unnecessarily inflated and increased. Velázquez-Piñol received approximately $710,000 in payments from BDO for the ASES contracts it was awarded. Counts 20 through 25 list the wire communications transmitted and caused to be transmitted in interstate commerce, all in furtherance of the conspiracy, scheme to defraud, and the theft of federal funds.
The indictment also includes a money laundering conspiracy charge against Velázquez-Piñol and Scherrer-Caillet, and six substantive money laundering counts against Velázquez-Piñol.
“Public corruption continues to erode the trust between government officials and our citizens. Defendants Keleher and Ávila-Marrero exploited their government positions and fraudulently awarded contracts funded with federal monies. The greed of the private individuals charged along with these former government officials, resulted in inflated government contracts which deprived our citizens of much needed education and health services,” said U.S. Attorney Rosa Emilia Rodríguez-Vélez. “Government officials are entrusted with performing their duties honestly and ethically. The charged offenses are reprehensible, more so in light of Puerto Rico’s fiscal crisis.”
“Yesterday’s indictment alleges that these individuals were involved in a public corruption campaign and profited at the expense of Puerto Rico’s children. That is completely unacceptable,” said Neil E. Sanchez, Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s Southern Regional Office. “OIG Special Agents will continue to aggressively pursue those who seek to enrich themselves at the expense of our nation’s students. America’s students, their families, and taxpayers deserve nothing less.”
“The illegal granting of contracts paid with monies from the Medicaid program is unacceptable. The Medicaid program is intended to provide health care benefits to low-income individuals and families, and any improper use of these funds will jeopardize its future availability. HHS-OIG and its law enforcement partners will continue to aggressively pursue to the fullest extent of the law those who seek to unlawfully enrich themselves from Medicaid funds,” said Scott Lampert, Special Agent in Charge of HHS-OIG New York Regional Office.
“Today’s efforts are the result of true team work. Thanks to the admirable dedication of our partners at the United States Attorney’s Office, and the Inspectors General for both the Departments of Education and Health and Human Services, new schemes have been uncovered, along with attempts to hide the proceeds of those schemes. Moving forward with the help of our local partners, the FBI will continue to make apprehending and exposing those who would do harm to the People of Puerto Rico our top priority,” said Douglas A. Leff, Special Agent in Charge of the FBI.
The case is being prosecuted by Assistant U.S. Attorneys José Capó-Iriarte and Marie Christine Amy. If found guilty, the defendants are facing possible sentences of up to 10 years for conspiracy and theft of government funds, and up to 20 years for wire fraud and money laundering. The charges contained in the indictment are merely accusations. The defendants are presumed innocent unless and until proven guilty.
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